In an age of customer-service fumbles and a plethora of services, high-tech wizards dream of bundling as the lightning rod to greater revenues. So far, theory has proved superior to practice. But optimism may yet triumph.
Unlike in the past when AT&T’s monopoly reigned, competition has turned the consumer into an unblushing bride who has the option of carriers, a variety of services and the ever-enticing carrot of low prices.
Bundling challenges service providers to develop and adapt technology toward the goal of integrating many services into one platform, one customer and one bill.
In a recent study conducted by The Strategis Group, most providers report facing hurdles winning customers over to the bundling packages.
“While many carriers continue to enthusiastically embrace bundling,” said the report, “(and while carriers in general strive toward a wide portfolio of telecom services), others have turned away from bundling.”
The hurdle has specifically been billing, said Randall Haley, a Strategis Group analyst.
Haley said carriers continue to hold on to the dream of bundling because that is what customers ultimately desire.
“People stay more in the service and it is easier to acquire more customers because of single bills and single purchase contact,” said Haley.
The report said that companies continue to rationalize bundling as an important strategy that “will continue to affect the competitive landscape, and thus deserves special attention.”
But carriers have seen little effect thus far. Only 21 percent of wireless users patronize bundling. But for both wireless and wireline users that figure reaches 17 percent. About 31 percent of bundles contain wireless services. Local telephone is on top with 79 percent, long-distance with 63 percent and Internet access with 33 percent.
Local and long-distance services make up 35 percent of all bundles and the most popular ones contain wireless services. The breakdown demonstrates that a combination of long-distance and wireless add up to 10 percent; local phone and wireless 7 percent; local, long-distance and wireless also 7 percent; and local, wireless and Internet access make up 4 percent.
Owing to low efficiency levels, satisfaction still eludes most wireless customers who purchase their services in a bundle. The report says 37 percent of households that purchase wireless services in a bundle rated the service as excellent or very good against 48 percent who buy services individually.
Of all those who use a bundle, only 36 percent are interested in adding wireless service to it.
Although 83 percent of households do not subscribe to a bundle of services, only 12 percent of nonsubscribers are not interested, according to the report.
The customer continues to demand better services as they are offered more choices, Haley said.
Apart from technology, Haley noted the other problem has been marketing the virtues and possibilities of the services.
“Customers are probably not aware of all the possibilities. In some cases, the marketing was strong, and in others, it was not strong,” said Haley.
One challenge to bundling is confronting legacy systems and adjusting to the rash of platforms inherited from mergers and disaggregations.
“The problem has always been how to tie billing software, order management, customer-care software and business-to-business infrastructure into the network,” said Kent Steffen, president and chief executive officer of Telution, which develops bundling platforms.
Steffen identifies the recent marriage between AT&T and NTT DoCoMo as posing problems because AT&T will have to make decisions about how to bill the suite of DoCoMo services and integrate them with AT&T’s.
“It’s one thing to offer those services and another to bill for those services,” he said.
Two carriers, Qwest Inc. and Alltel Inc., have had varying degrees of success in their wireless bundling endeavors.
Qwest’s has been humming along. Adopting what it called `the big screen, little screen strategy,’ the company has been able to generate its services under a single platform.
“Whether it’s PDAs, phones or PCs, we want the user to have a similar experience,” said Sue Schaefer, Qwest’s senior vice president for marketing and sales.
She said from the inception, the company integrated 58 of its legacy systems and created one billing inquiry center to handle and reconcile all services and accounts to achieve a seamless integration of both landline and wireless services.
Qwest boasts of a retention level of 30 percent, adding that disaggregating companies are a boon to them.
Schaefer said apart from giving it much publicity and marketing, “the packages work together and they reinforce each other.” She said a phone call transfers from the wireline network after one or two rings to a wireless device, and an e-mail message canceled on the wireless screen will not pop up on the computer screen.
“It’s mobile information on the go, whether it’s stocks, traffic or weather,” she said.
Mickey Freeman, Alltel’s director of relationship marketing, describes his company’s bundling services as “still alive and well.” He said one challenge the company is facing is how to put customer data together to determine their bundling needs and present the services in a way that works for the customer and Alltel.
“Alltel has dealt with it reasonably well,” he said.
However, he noted that Alltel uses multiple billing systems.”In most cases, we can bill multiple services on the same bill,” he said.
He said the recent acquisitions and territory swaps from GTE Wireless and Verizon Wireless have meant “no single bill possibilities at this point,” but he promised a resolution to that issue by the end of the year.
“We were quick to face the billing challenge years ago and have recorded success,” he said.
Unlike Qwest, Alltel has separate operational platforms, but the billing system is sent to one billing platform that can accommodate pager, local phone, long-distance and Internet services.
Although he said he would not disclose the company’s customer retention rate, he agrees with Strategis Group’s figure that 17 percent of customers are at home with bundling.
“It is significantly better for multiple service households than for single service households,” he said.
